Lloyd's Maritime and Commercial Law Quarterly


Elise Bant *

Hayward v Zurich Insurance drives a wedge between fraud and mistake. This paper tests the controversial analysis offered by the Court, exploring the boundaries of fraud through the lens of tort, unjust enrichment, estoppel by convention and the doctrine of illegality to identify the range of ways in which the law responds to prevent and remedy fraud. The discussion reveals the porous and overlapping boundaries between claims in this field, and also the important, broader implications for coherence in the law arising out of recognition of an independent category of “policy-based” reasons for restitution. The analysis suggests some controversial answers to contemporary challenges posed by modern commercial law and practice, including for one view of the “at the expense of” element of claims in unjust enrichment and for the pivotal concept of “intention” in fraud.

1. Introduction

Fundamental to the accepted analytical structure of the law of unjust enrichment is that claims founded on fraudulent misrepresentations made to the claimant are cases of induced mistake.1 While there may be alternative claims available (such as for compensation for loss caused by reliance on the misrepresentation pursuant to the tort of deceit, or pursuant to statutory interventions such as the Misrepresentation Act 1967, s.2(1)) the critical factual feature from an unjust enrichment perspective is that the claimant’s consent has been vitiated and that the relevant vitiating (or unjust) factor is mistake. Where the claimant has conferred a benefit on the defendant as a result of that mistake (ie, there is an operative or causative mistake), there is on the face of it the start of a successful claim in unjust enrichment.2 There are other hurdles to recovery that must be overcome: if the


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